U.S. Fed Cut Rates, GDP 1Q08 at 0.6%

leo — Fri, 05/02/2008 - 23:42

US Fed reduced its benchmark rate by 25 bps to 2%, the 7th rate cut in 7 months. The central bank did not rule out further rate cuts and may take additional actions to ease financial market turmoil, such as expanding the size of cash-loan auctions for banks.

GDP increased by 0.6% in 1Q08, with the increase in inventories preventing the economy from contracting. Consumer spending rose by 1% in 1Q08, compared to 2.3% gain in 4Q07.

In March, consumer spending rose 0.4%, following an increase of 0.1% in February, reflecting an increase in prices that is reducing consumers’ purchasing power.

Manufacturing in the US shrank for the 3rd month in April, unchanged at 48.6, indicating no sign of improvement from the first quarter.

US unemployment benefits reached a 4-year high, increasing to 3.019m, signaling the weakening of the labour market.

(Bloomberg)

Comments

US Fed is expected to leave the overnight lending rate at 2% till the end of 2008, suggesting that policy-makers are now willing to sit back and see if the economy recovers.

The latest rate cut has widened the interest rate differentials between US and countries with high interest rates such as Australia and New Zealand. As such, the AUD and NZD had gained as investors seek higher-yield assets.

However, with speculation that the US Fed is done with rate cuts, the USD may begin to recover in the short-term.

Money & Investing

tl;dr

chinwan — Thu, 05/15/2008 - 11:15

tl;dr

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If you're not part of the solution, you're part of the precipitate.

Wat the....

alvin — Fri, 05/16/2008 - 15:59

Is there is hidden meaning to that phrase that I am not aware of....?

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Penguins are not bird-like mammals

urbandictonary

chinwan — Fri, 05/16/2008 - 21:02

http://www.urbandictionary.com/define.php?term=tl%3Bdr

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If you're not part of the solution, you're part of the precipitate.

Luckily...

leo — Sat, 05/17/2008 - 08:44

.. i didn't post the full version from which i summarized the above....

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"Financial valuation is the art of drawing a crooked line from an unproved assumption to a foregone conclusion." -- Peter Kennedy http://random-delights.blogspot.com